Anti Money Laundering (AML) in the Bahamas

Money laundering in the Bahamas is considered a significant problem. It is an important regional and offshore financial center. Second to tourism, the economy depends on its financial services sector. The U.S. dollar circulates freely in the Bahamas, and is accepted everywhere on par with the Bahamian dollar.

Money laundering in the Bahamas is related to financial fraud and the proceeds of drug trafficking. Illicit proceeds from drug trafficking usually take the form of cash or are quickly converted into cash. The strengthening of AML laws has made it increasingly difficult for most drug traffickers to deposit large sums of cash. As a result, a new trend has developed of storing extremely large quantities of cash in security vaults at properties deemed to be safe houses. Other money laundering trends include the purchase of real estate, large vehicles and jewelry, and the processing of money through a complex national or international web of legitimate businesses and shell companies.

The Central Bank of the Bahamas is responsible for the licensing, regulating and supervising of banks and trust companies operating within the Bahamas. The Central Bank Act of 2000 (CBA) and The Banks and Trust Companies Regulatory Act of 2000 (BTCRA) enhanced the supervisory powers of the Central Bank. The CBA gives the Central Bank extensive information gathering powers, including on-site inspection of banks, and provides for enhanced cooperation between overseas regulatory authorities and the Central Bank. The BTCRA expands the licensing criteria for banks and trust companies, enhances the supervisory powers of the Inspector of Banks and Trust Companies, and enhances the role of the Central Bank’s Governor, including the right to deny licenses to banks or trust companies that s/he deems unfit to transact business in the Bahamas. In 2001, The Central Bank enacted a physical presence requirement for managed banks. Managed banks are those without a physical presence but which are represented by an agent such as a lawyer or another bank. The requirement stated that these banks must either establish a physical presence in the Bahamas (i.e., an office, separate communications links and a resident director) or cease operations. In 2009, the Central Bank issued the Guidelines for Licensees on the Prevention of Money Laundering & Countering the Financing of Terrorism which replaced previous legislation.

AML Training in Bahamas

The Financial Transaction Reporting Act and the Anti Terrorism Act require all financial institutions in the Bahamas to implement Anti Money Laundering and Counter Terrorist Financing (AML/CTF) training programs to detect and prevent illicit activities within the country.

The Economy of the Bahamas

The Bahamas is one of the wealthiest Caribbean countries with an economy heavily dependent on tourism and offshore banking. Tourism, together with tourism-driven construction and manufacturing, accounts for approximately 60% of the Gross Domestic Product (GDP) and directly or indirectly employs half of the island’s labor force.

Steady growth in tourism receipts and a boom in construction of new hotels, resorts and residences had led to solid GDP growth in recent years, but tourist arrivals have been on the decline since 2006. Financial services constitute the second-most important sector of the Bahamian economy and, when combined with business services, account for about 36% of GDP.

Banking in the Bahamas

The Central Bank of the Bahamas is responsible for the licensing, regulating and supervising of banks and trust companies operating within the Bahamas.

The Central Bank fills the traditional roles as issuer of currency, banker to both domestic banks and the government, and regulator and supervisor of the banking sector.

The Bahamian Currency

The currency of the Bahamas is the Bahamian Dollar. The United States Dollar is also freely traded and accepted.

Bahamian Dollars are issued in ½, 1, 3, 5, 10, 20, 50 and 100 denominations.

Coins are issued in 1, 5, 10, 15 and 25 cent denominations.

Other Key Statistics of The Bahamas

Time Zone: UTC-5 (same time as Washington, DC during Standard Time). Daylight saving time: +1hr, begins second Sunday in March; ends first Sunday in November.

Location: Caribbean, chain of islands in the North Atlantic Ocean, southeast of Florida, northeast of Cuba.

Population: 307,451 (July 2008 est.).

Labor Force: Approximately 3% work in agriculture, 7% in industry and 90% in services industries. The unemployment rate is 7.6%.

Languages Spoken: English (official), Creole (among Haitian immigrants).

Trade Organizations: The Bahamas is a member of the United Nations (UN) and the World Trade Organization (WTO).